Goods export grow 9.1% in May, oil imports widen trade deficit

India's goods exports touched $38.13 billion in May, 9.1% higher than $34.95 billion registered during the same month a year ago. The value of merchandise imports rose to $61.91 billion, 7.7% up as compared to $57.48 billion in May 2023.

The highest growth was registered in exports of coffee (64.23%), tobacco (58.38%), electronic goods (22.97%), meat, dairy & poultry products (22.95%), fruits & vegetables (20.75%), tea (19.57%), plastic & linoleum (16.6%), petroleum products (15.75%), drugs & pharmaceuticals (10.45%), engineering goods (7.39%), oil seeds (5.75%), etc.

The increase in imports was highest in goods like pulses (181%), transport equipment (31.88%), petroleum crude and products (28%), vegetable oil (27.46%) and machine tools (12.24%) during the month.

"While exports growth was robust and outpaced imports growth, the merchandise trade deficit widened to a seven-month high $23.8 billion in that month from $22.5 billion in May 2023, driven by a jump in the net oil imports," says Aditi Nayar, chief economist and head of Research and outreach, ICRA. "With the merchandise trade deficit enlarging by about $6 billion in April-May 2024 relative to the year-ago months, we expect the current account deficit to rise to 1.5% of GDP in this quarter from 1.1% of GDP in Q1 FY2024," she adds.

Industry body PHD Chamber of Commerce and Industry termed the double digit exports growth encouraging. “India’s exports increased significantly despite geopolitical headwinds," Sanjeev Agrawal, president, PHDCCI, says.

Together with services exports, the Commerce ministry estimates India’s total exports for May 2024 to be at $68.29 billion, a positive growth of 10.25 % vis-à-vis May 2023. The combined value of imports for the same month is estimated at $ 79.20 billion, a 7.95 % growth compared to May 2023.

“The ongoing Russia-Ukraine war coupled with various major geo-political tensions including the Red Sea crisis and Israel-Hamas conflict has also made the international trade scenario much tougher for the Indian exporters. Continuing the positive growth momentum for the second month in a row during 2024-25 on the back of buoyant order bookings goes to show the resilience of the exports sector and Indian exporting community. We further expect exports to show better growth numbers with improved demand coming in from the European Union, UK, West Asia and the US, which has given boost to the order bookings by over 10 % and has come as sign of recovery for labour-intensive sectors of exports," says Ashwani Kumar, president, Federation of Indian Export Organisations.